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by Juliana Liu, CNN Business — November 28, 2022.
A violent incident with staff at the world’s largest iPhone factory last week in central China blurs Apple’s strict source and highlights how the country’s strict zero-COVID policy is hurting global tech companies.
The unrest began last month when staff left the factory campus in Zhengzhou, the capital of central Henan province, due to COVID fears. Due to lack of staff, bonuses were given to staff to return.
But protests erupted this week when new hires said the control had broken its promises. The workers, who clashed with security guards dressed in hazmat suits, were eventually presented with cash to quit and leave.
Analysts said the problems facing Taiwanese contract production company Foxconn, one of Apple’s main suppliers that owns the facility, will also boost the speed of China’s diversification into countries such as India.
Daniel Ives, managing director of equity studies at Wedbush Securities, told CNN Business that the ongoing production shutdown at Foxconn’s sprawling campus in the central Chinese city of Zhengzhou is an “albatross” for Apple.
“Each week of this shutdown and unrest, we estimate that it costs Apple about $1 billion per week in lost iPhone sales. Now, about 5% of iPhone 14 sales are likely due to those abrupt shutdowns in China,” he said.
The iPhone 14 lawsuit states that the Black Friday holiday weekend was much larger than the source and could lead to a primary shortage before Christmas, Ives said, adding that the disruption at Foxconn, which began in October, was a major “blow” to Apple. room.
In a note Friday, Ives said Black Friday checks showed a primary shortage of iPhones across the board.
“Based on our analysis, the iPhone 14 Pro shortage has gotten much worse over the past week with very low inventories,” he wrote. “Many Apple stores now have shortages of iPhone 14 ProArray. . . before a typical December. “
Ming-Chi Kuo, an analyst at TF International Securities, wrote on Twitter that more than 10 percent of global iPhone production capacity has been affected by the Zhengzhou campus.
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Earlier this month, Apple said shipments of its new iPhone line would be “temporarily affected” by Covid restrictions in China. It said its meetings plant in Zhengzhou, which houses some 200,000 workers, was “currently operating at a particularly reduced capacity,” due to covid restrictions.
The Zhengzhou campus has been dealing with a covid outbreak since mid-October that has caused panic among its employees. Videos of others leaving Zhengzhou on foot went viral on Chinese social media in early November, forcing Foxconn to step up measures to take him back. .
To attract staff, the company said it quadrupled bonuses for plant staff this month. A week ago, state media reported that another 100,000 people had indeed been hired to fill the vacancies.
But on Tuesday night, many employees, mostly new employees, began protesting against the terms of the salary packages presented to them and also against their living conditions. The scenes turned violent the next day when the staff clashed with a giant. Number of security forces.
By Wednesday night, the crowd had calmed down, and protesters returned to their dormitories on the Foxconn campus after the company showed up to pay newly hired staff 10,000 yuan ($1,400), or about two months’ salary, to give up and leave the company altogether.
Violence disrupts the world’s largest iPhone factory in China; Workers presented $1,400 to leave
In a message sent to CNN Business on Thursday after the protests ended, Apple said a team on the floor of the Zhengzhou plant was working intensively with Foxconn to make sure certain employees’ considerations were addressed.
Even before this week’s protests, Apple had started manufacturing the iPhone 14 in India as it sought to diversify its chain outside of China.
The announcement at the end of September marked a first shift in its strategy and came at a time when U. S. tech companies are being able to make a move to the U. S. The U. S. was looking for opportunities in China, the world’s factory for decades.
The Wall Street Journal reported earlier this year that the company was looking to increase production in countries such as Vietnam and India, citing China’s strict covid policy as one of the reasons.
Kuo said on Twitter that he believes Foxconn will push for iPhone production capacity expansion in India following the Zhengzhou shutdowns and protests.
Foxconn’s iPhone production in India will increase by at least 150 percent between 2023 and 2022, he predicted, and the longer-term goal would be to ship between 40 and 45 percent of those phones from India, up from fewer than four. % now.
— Chris Isidore contributed to this report.
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